Resideo Technologies, Inc. · NYSE:REZI
Resideo Technologies — Investor Day (March 2021)
64 slides from Resideo Technologies's investor day presentation, Mar 11, 2021
Slide 1: Investor Presentation March 2021
resideo INVESTOR PRESENTATION MARCH 2021
Slide 2: Presenters, Topics and Time
Presenter Topic Time Jay Geldmacher, Resideo Overview 10 min President and Chief Executive Officer Rob Aarnes ADI Global Distribution 15 min President, ADI Global Distribution Phil Theodore Products & Solutions 20 min President, Products & Solutions Jeff Frank Product Innovation 15 min Senior Vice P
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements.” All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-look
Slide 4: Jay Geldmacher, Chief Executive Officer
Jay Geldmacher Chief Executive Officer 3 © 2021 Resideo Technologies, Inc. All Rights Reserved.Jay Geldmacher Chief Executive Officer 3 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 5: Right team and structure in place to leverage growth
Right team and structure in place to leverage Leading distribution platform with focused broad portfolio, channel reach and Pro investment in digital and adjacent markets to relationship to drive long-term growth drive continued growth and profit expansion Bringing focus to team with rich history of
Slide 6: Products & Solutions and ADI Global Distribution overview
Products & Solutions Leading global wholesale distributor of A leading global provider of home air, security, fire and low-voltage products water, security and energy products and solutions 2020 Revenue Presence in (1) 2020 Operating Income (2) For Security and Low-Voltage Products Homes 2020 Operat
Slide 7: Addressable Market
ADDRESSABLE MARKET ADDRESSABLE MARKET ~$9B ~$25B ~$11B ~$2B +$60B ~$3B +$25B ADDRESSABLE MARKET +$85B ADDRESSABLE MARKET GROWING MID-TO-HIGH SINGLE DIGITS GROWING LOW-TO-MID SINGLE DIGITS Source: IHS Markit; CE Pro; InfoComm; AVIXA; BSRIA; BRG; IDC; Resideo management estimates 6 © 2021 Resideo Tech
Slide 8: Resideo Wins When the Pro Wins
Trusted product partner Broad product offering Omnichannel 1,200+ OEMs Service and support Many professional and OEM relationships extend Longstanding reliability Supporting professionals’ growth and profitability Trusted brands Resideo Wins When the Pro Wins 7 © 2021 Resideo Technologies, Inc. All
Slide 9: Focus, Accelerate and Execute
→ • Realigned organizational structure for execution • Historically siloed • Get right team and and growth Products & Solutions organization structure product lines and R&D • Breaking down silos across Resideo • Reinvigorate innovation • Underinvestment and and R&D agility • Building executive level
Slide 10: Strategic priorities for long-term growth
Position for long- Build on ADI’s Better leverage Invest in Focus P&S on where Strengthen position term connected leading platform within existing ADI and P&S innovation we have right to win in core markets home opportunity and adjacent markets relationship 9 © 2021 Resideo Technologies, Inc. All Ri
Slide 11: Long-term financial targets
(1) Revenue $5,071M ~6% CAGR 6% to 8% CAGR 4% to 6% CAGR Gross Margin 30% to 32% 19% to 20% 46% to 48% 25.9% Operating Margin 13% to 15% 9% to 10% 28% to 30% 6.1% (1) CAGR for 2020 through 2024T period Long-term targets represent our goals and are not projections of future performance 10 © 2021 Resi
Slide 12: Key investment themes
Attractive Product and Transformation Targeted Compelling markets with channel underway to investment financial model leadership with multiple secular reduce costs, across both with top line growth trends unique focus on build scalable businesses to growth, margin professional organization and drive
Slide 13: Rob Aarnes, President ADI Global Distribution
Rob Aarnes President ADI Global Distribution 12 © 2021 Resideo Technologies, Inc. All Rights Reserved.Rob Aarnes President ADI Global Distribution 12 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 14: ADI revenue and low voltage security market
in Low Voltage Security (1) Products 6%+ CAGR $3.0B $2.8B $2.7B $2.5B $2.4B $2.2B served through ADI 2015 2016 2017 2018 2019 2020 ADI Revenue (1) Source: Market data from IHS Markit 13 © 2021 Resideo Technologies, Inc. All Rights Reserved.in Low Voltage Security (1) Products 6%+ CAGR $3.0B $2.8B $2
Slide 15: 2020 ADI Global Distribution Snapshot
2020 ADI Global Distribution Snapshot Sales by Sales by Product Category Geography Physical locations, e-commerce and in- EMEA Omnichannel person consultative sales support 16% India Other 2% Geographic 30% Local product availability in 195 markets Footprint Security Americas 70% 82% Products & Wide
Slide 16: ADI product categories and addressable markets
Physical Security Residential A/V Professional A/V Data Communications Security and life safety devices Home automation, control, audio- Audio and visual products Cabling, associated accessories and professionally installed in visual, networking and smart professionally installed in networking hardw
Slide 17: How professionals buy through ADI
1 Business or homeowner 2 Pro contacts ADI to 3 Pro purchases products 4 Pro completes installation desires to add or upgrade understand available “by-the-job” shortly before of the new system for the a physical security system solutions, which often installation, often picking business or homeowner
Slide 18: ADI ecosystem of suppliers, branches and customers
PRODUCTS & SOLUTIONS SUPPLIER PARTNERS PRIVATE BRANDS • Leverage Best Practices • Rapidly Launch NPI • Market & Customer Insights Vast global Browse, shop and Account Improves customer distribution purchase products management profitability and network with to ship or same-day ensures broad efficien
Slide 19: Global e-commerce penetration
Global E-Commerce Penetration Online-to-Branch Order Pickup $364M FY 2020 +24% YoY +25% YoY +27% YoY A scalable global platform with Leveraging multi-channel Enhanced visibility and further growth potential marketing tools consistency across channels ✓ Online quote request ✓ 17 country e-commerce si
Slide 20: Omnichannel buying and technology
3x 46% Omnichannel buying +25% 1 More volume from Of e-commerce Growth in website shopping convenience multichannel customers vs. customers used pick up cart revenue single channel in Branch options Redeploy sales team 28% 50,000+ 950+ Of total order volume A.I. cross-selling Customers across 10 2 b
Slide 21: Improving decision-making with technology
Improving decision-making with Using A.I./Machine Learning technology Creating more bandwidth for salespeople Annual Revenue per Sales Employee Business Intelligence (BI) tools across to recommend the next best action for to service more customers and perform our value chain salespeople higher-value
Slide 22: Enhancing the ADI platform
• Enhance customer experience • Expand product technology offerings • Broaden market coverage • Website & App • Residential & Pro • Inside Account • CRM and Data AV Management Analytics • Drive sales force • Omnichannel Integration • Data • Location Growth • AI/Machine effectiveness Communications L
Slide 23: ADI key takeaways
Global market Growth culture Adjacent Investing in Proven track leader in a category the customer record of with deeply loyal experience and fragmented professional opportunities delivering growth industry contractor more than double sales effectiveness and operating relationships addressable with d
Slide 24: Phil Theodore, President Products & Solutions
Phil Theodore President Products & Solutions 23 © 2021 Resideo Technologies, Inc. All Rights Reserved.Phil Theodore President Products & Solutions 23 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 25: 24 © 2021 Resideo Technologies, Inc. All Rights Reserved.24 © 2021 Resideo Technologies, Inc. All Rights Reserved.
24 © 2021 Resideo Technologies, Inc. All Rights Reserved.24 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 26: Products & Solutions key products and addressable markets
• Energy management / demand response • Equipment predictive maintenance • IAQ data insights • Remote monitoring and automation • Thermostats / Temp • Residential Intrusion • Potable Water Controls • Furnaces • Air Quality Systems – Pro / DIY • Backflow Prevention • Water Heaters Key Products • De-/
Slide 27: 2020 Products & Solutions Snapshot
2020 Products & Solutions Snapshot Sales by Sales by Product Category Geography Whole Home Extensive product depth and Security EMEA Air Provider breadth Energy Americas APAC Quality and Water 130+ years of experience Innovation Sales by Channel Other OEM Deep Network of Pro Installers, Distribution
Slide 28: © 2021 Resideo Technologies, Inc. All Rights Reserved. 27© 2021 Resideo Technologies, Inc. All Rights Reserved. 27
© 2021 Resideo Technologies, Inc. All Rights Reserved. 27© 2021 Resideo Technologies, Inc. All Rights Reserved. 27
Slide 29: 28 © 2021 Resideo Technologies, Inc. All Rights Reserved.28 © 2021 Resideo Technologies, Inc. All Rights Reserved.
28 © 2021 Resideo Technologies, Inc. All Rights Reserved.28 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 30: Product portfolio: air, security, water, energy
AIR SECURITY WATER ENERGY WiFi Ductless Controller SERVICES WiFi Security Camera Smart Motion Smart Room Detection Camera Sensor Smart Room Sensor HD WiFi Outdoor WiFi Security Video Camera Two-Way Wireless Wireless Smoke & All-In-One Camera CO Detector Glassbreak Detector Security Panel Smart Therm
Slide 31: Garage, lock, door, appliances, lighting
GARAGE LOCK DOOR APPLIANCES LIGHTING 30 © 2021 Resideo Technologies, Inc. All Rights Reserved.GARAGE LOCK DOOR APPLIANCES LIGHTING 30 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 32: Homeowner pull and Pro contractor push
Homeowner Pull Pro Contractor Push • Needs systems • Installs or fixes installed • Offers custom • Requires maintenance solutions • Wants more features • Continuous service and maintenance • And more… Source: NAHB; U.S. Energy Department; U.S. Environmental Protection Agency; Parks Associates 31 © 2
Slide 33: Channels and partnerships
Products sold through 3,000+ Distributors • Central to all our channels • Critical to new home construction and Partnerships with 1,200+ OEMs remodeling • Customers of our distribution partners Utility and Insurance product rebate programs • Increasing Pro sales at Retail Retail strategy for DIY / D
Slide 34: Protect the base and reposition for growth
Product Development Execution • Delivering on core product commitments Protect the Base Supercharging our Sales Force • Account level strategies and relationship management tools Business 360° View of the Customer • Improving customer experience and support Customer- Driving Channel Loyalty • New lo
Slide 35: Products & Solutions key takeaways
New leadership Legacy of Unparalleled Diversified Deep innovation portfolio in large channel connection with track record of strategy with with Pro driving operational combined with growing markets execution and rebuilt and with differentiated significant runway sticky long-term transformation redes
Slide 36: Jeff Frank, SVP Product Innovation
Jeff Frank Senior Vice President, Product Innovation 35 © 2021 Resideo Technologies, Inc. All Rights Reserved.Jeff Frank Senior Vice President, Product Innovation 35 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 37: Innovation strengths and intellectual property
• History of industry firsts • Depth and span of intellectual property • Breadth of product portfolio • Unique understanding of building science • Team with deep industry experience 36 © 2021 Resideo Technologies, Inc. All Rights Reserved.• History of industry firsts • Depth and span of intellectual
Slide 38: Hardware and software innovation history
Hardware Software • Alarm transport service with recurring monthly revenue • Adding video to remote security monitoring • Voice-controlled thermostat, migrated to Amazon Mechanical and Electrical Alexa in security system Component Control • Home security system with Alexa built in System • Geofence
Slide 39: Customer pain points
Keeping the most critical 1 systems of the home running Many solutions; 2 no complete solutions Customer Multiple applications; 3 Pain hard to install and use Points 4 Professional help; who to trust and how to navigate 5 Affordability and data privacy 38 © 2021 Resideo Technologies, Inc. All Rights
Slide 40: Connected home vision
• Proactive homes • Seamless user experience • Systems working together as an ecosystem • Homeowner driven insights • Data privacy and protection 39 © 2021 Resideo Technologies, Inc. All Rights Reserved.• Proactive homes • Seamless user experience • Systems working together as an ecosystem • Homeown
Slide 41: Platform architecture: apps, cloud, hubs, devices
Apps Homeowner Service Pro Operational Intelligence Cloud Situational Awareness HVAC Security Water Pool Solar Irrigation Appliances … … … Hub Behind The Wall Home / Building Hub On The Counter Resideo rd 3 Party Device Device Device Device 40 © 2021 Resideo Technologies, Inc. All Rights Reserved.Ap
Slide 42: Reducing complexity of building systems
• Provide peace of mind around comfort, • Empowering to be proactive, less reactive security and efficiency • Providing more touch points with customers • Migrating from management by crisis that enable trusted relationships • Data privacy • Increasing efficiency in their business (fewer truck rolls
Slide 43: Resideo differentiation
• Core foundation • Resideo • Tie everything differentiation together • Hardware and firmware • Knowing what • Use intelligence to makes a home create customer • On-the-wall, comfortable, value behind-the-wall, in- efficient and safe the-wall or on a • Provide actionable desktop • Leads to great dat
Slide 44: Simplicity and sustainability focus
• Reduce complexity for our • Protecting our planet’s stakeholders resources • Enable powerful technology • Focus on energy, air and that is transparent to end user water quality 43 © 2021 Resideo Technologies, Inc. All Rights Reserved.• Reduce complexity for our • Protecting our planet’s stakeholde
Slide 45: Aligning product portfolios and data competencies
Aligning and rebalancing Expanding analytics and product portfolios data competencies Creating unified ecosystem team Increasing role of customers – professionals and homeowners – in our innovation processes Consolidating building science knowledge Prioritizing platforms – Partnering with adjacent h
Slide 46: Interoperability and partnering
Interoperability Focus on fewer, Accelerated Partner to grow Simplicity with decisions and across Resideo more targeted our ecosystem and products that offerings offerings NPI velocity third-party deliver more value integrations to homeowners and professionals 45 © 2021 Resideo Technologies, Inc. Al
Slide 47: Tony Trunzo, Chief Financial Officer
Tony Trunzo Chief Financial Officer 46 © 2021 Resideo Technologies, Inc. All Rights Reserved.Tony Trunzo Chief Financial Officer 46 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 48: 2020 and H2 2020 financial performance
$M $M Gross Profit Revenue 6,000 1,400 • H2 2020 performance highlights 1,200 5,000 +27% +13% earnings and cash flow power 1,000 4,000 800 3,000 600 • Improved market conditions and 2,000 400 business execution 1,000 200 0 0 • Structural changes position for 2019 2020 H2 2019 H2 2020 2019 2020 H2 20
Slide 49: Financial flexibility and liquidity
• $279M net proceeds from equity offering (1) $645M Net Debt • Refinanced credit facilities $244M • No significant amortization requirements until 2026 2020 Operating Cash Flow (2) • Upsized revolver has improved ~$1B Available Liquidity liquidity • Recent ratings actions reflect improvement: (3) 1.
Slide 50: Financial priorities
Invest in targeted, high return initiatives and Expand gross margin through manufacturing growth markets where we have competitive and supply chain efficiency, pricing advantage and a right to win optimization and leveraging fixed cost base High level of conversion of income into Grow operating marg
Slide 51: Opportunities for growth, savings and efficiency
Opportunities for growth, savings and efficiency • Scalable operations Work with businesses to identify ideas Outline processes and • Higher margins support day-to-day execution • Faster growth Prioritize and accelerate high Track performance return projects and drive accountability 50 © 2021 Reside
Slide 52: Corporate costs and SG&A as % of revenue
Corporate Costs as % of Resideo SG&A as % of (1) Revenue Revenue • Simplify organization and build scalable foundation 7% 25% % Rev % Rev 5.7% • Efficient spending – eliminate what 20% 6% is not creating value % Rev 20% < 17% 5% % Rev • Increasing accountability – every < 4.0% dollar has an owner 15
Slide 53: Gross margin expansion actions
(1) ADI Gross Margin (1) Resideo Gross Margin 19.5% 25.0% • Annual supply chain savings target 17.0% 20.0% ~31% 35% 15.0% • Manufacturing footprint 10.0% optimization 30% 25.9% 5.0% • Value engineering and scalable 25% 0.0% 2020 2021E 2024T design (1) 20% P&S Gross Margin • Profitability management
Slide 54: Investment in processes and innovation
• Creation of Innovation ADI Global Products & organization Distribution Solutions • Revamped NPI process • Expand e-commerce • Reposition for growth • Digital transformation • ADI digital tools rollouts • Category expansion • One Resideo platform • M&A capabilities • New product innovation • Geogra
Slide 55: High return investment and capital expenditures
ADI Global Products & • Expect capital expenditures of ~$90M in 2021 Distribution Solutions • Targeted investment to drive future growth; • Bolt-on M&A • Accelerate growth in +$40M of incremental activity in 2021 attractive categories • Adjacent categories • Systems upgrades to support expected grow
Slide 56: Long-term targets
(1) Revenue ~6% CAGR 6% to 8% CAGR 4% to 6% CAGR Gross Margin 30% to 32% 19% to 20% 46% to 48% Operating Margin 13% to 15% 9% to 10% 28% to 30% Corporate Cost Under 4% of total revenue Operating cash flow of >$600 million Operating Cash Flow (1) CAGR for 2020 through 2024T period Long-term targets r
Slide 57: 2021E outlook and 2024T targets
(1) (2) $M 2020 2021E 2024T • Cash payment to Honeywell of Revenue 5,071 5,200 - 5,400 6,425 $140M annually related to ADI Segment Revenue 2,950 - 3,850 indemnity agreement – limited tax P&S Segment Revenue 2,121 - 2,575 deductibility Gross Margin 25.9% 26% - 28% 31% • Effective tax rate in mid-20s
Slide 58: Levers by segment and corporate
ADI Global Products & Corporate Distribution Solutions • Create scalable systems • Outgrow in our core market • Grow share in attractive and processes across markets (IAQ, Smart Water, • Expand into adjacencies corporate cost functions Comprehensive Security) • Increase digital and e- • Target reduc
Slide 59: Financial model summary
Solid Foundation + Scalability & Operating Accelerated Top Line Gross Margin Efficiency Margin Cash Growth Expansion + Leverage Generation Thoughtful Capital Allocation 58 © 2021 Resideo Technologies, Inc. All Rights Reserved.Solid Foundation + Scalability & Operating Accelerated Top Line Gross Marg
Slide 60: 59 © 2021 Resideo Technologies, Inc. All Rights Reserved.59 © 2021 Resideo Technologies, Inc. All Rights Reserved.
59 © 2021 Resideo Technologies, Inc. All Rights Reserved.59 © 2021 Resideo Technologies, Inc. All Rights Reserved.
Slide 61: www.resideo.com
www.resideo.comwww.resideo.com
Slide 62: Appendix
APPENDIX ADD TITLE HEREAPPENDIX ADD TITLE HERE
Slide 63: Summary of Financial Results (Unaudited)
SUMMARY OF FINANCIAL RESULTS (UNAUDITED) Twelve Months Ended December 31, December 31, 2020 2019 ($ in millions) Products & Solutions (1) $ 2,121 $ 2,175 Revenue 821 786 Gross profit 38.7% 36.1% Gross margin ADI Global Distribution $ 2,950 $ 2,813 Revenue 501 499 Gross profit 17.0% 17.7% Gross margi
Slide 64: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Twelve Months Ended December 31, December 31, 2020 2019 ($ in millions) Total debt $ 1,162 $ 1,180 Less: Cash 517 122 Net debt $ 645 $ 1,058 Reconciliation of Net income to Adjusted EBITDA (Non-GAAP) Net income $ 37 $ 36 Net interest expense 61 66 Tax ex